The Canadian Press

After almost a year on the job, Michael Sabia, chief executive of the Caisse de dépôt et placement du Québec, has written a letter reassuring Quebecers that’s being criticized for asking them not rush to judgment despite expected weak returns.

Sabia has been head of the Caisse since last March, coming on board after the global financial meltdown in the fall of 2008.

In a letter published in several Quebec newspapers on Monday, Sabia promised a return to “plain old common sense” when it comes to investing money that will be used to pay pension and insurance plan benefits to millions of Quebecers.

“The Caisse has just lived through the most difficult time in its history,” Sabia wrote.

“The economic and financial environment has changed radically. As a result, we have had to make important changes.”

Even though the Caisse is in better shape than almost a year ago, Sabia said, “despite our progress, there is still a great deal of work to do.”

The Caisse manages investments primarily for public and private pension and insurance plans in Quebec.

Concordia University lecturer Reena Atanasiadis said the letter has “a lot of superficial stuff,” but also reminds Quebecers they shouldn’t expect great returns for last year.

“He’s playing the public opinion card by saying, ‘Don’t judge me yet,’” said Atanasiadis, a lecturer in the finance department in the John Molson School of Business.

Sabia is doing this because the Caisse missed out on the full benefit of the stock market’s upswing last year, she said.

Atanasiadis said she expects Sabia to deflect weak results by saying it didn’t happen on his watch.

“But like (U.S. President Barack) Obama, you can only say it so often.”

The president of an association representing retired public employees said the change in direction still doesn’t explain why the Caisse lost almost $40 billion in 2008.

It also doesn’t satisfactorily explain expected weak returns for 2009, said Madeleine Michaud, of the Association quebecoise des retraites des secteurs public and parapublic.

“We are still skeptical about the change in direction for the Caisse,” Michaud said from Quebec City.

Michaud said her association has obtained documents under access-to-information legislation based on the first 11 months of last year that indicate the Caisse will have a return of six to seven per cent on funds it managed.

“It’s not a lot when we compare what’s expected anticipated from other pension fund managers,” she said.

Former Caisse executive Michael Nadeau said even though Sabia is repeating past messages, he wanted to tell Quebecers the Caisse will be more cautious.

“There was a storm, a financial ice storm at the Caisse, so Mr. Sabia, in effect, has to reassure Quebec depositors,” he said.

The Caisse’s returns aren’t expected to match other pension fund managers’ returns of 16 to 18 per cent for 2009 because it was underexposed in equities, Nadeau said.

Sabia is now telling Quebecers to look to future returns, said Nadeau, executive manager of the non-profit Institute for Governance for Private and Public Organizations.

Atanasiadis said Sabia needs to tell Quebecers he is taking care of their pensions and how the Caisse will meet its fiduciary obligations in the coming years when the fund will have to start paying out more than its taking in.

Sabia said the Caisse will now only invest in financial instruments that it understands and has mastered. In the past, the pension fund manager invested in financial instruments such as asset-backed commercial paper, which is considered highly complex and very risky.

The Caisse now will also a mid-year financial update, a first in its history, Sabia said.

Sabia, who joined the fund manager after spending several years as CEO of telecom giant BCE Inc., the parent of Bell Canada, said the Caisse needs solid financial foundations that can weather market turbulence.